December 10, 2020

Tenant background screening company ordered to pay $4.25 million by the FTC for inaccurate reports

On December 8, 2020, the US Federal Trade Commission (FTC) announced that it reached a settlement with California-based AppFolio, Inc., a consumer reporting agency specializing in tenant background screening reports.  The settlement ordered AppFolio to pay a $4.25 million civil penalty for failing to ensure the accuracy of the credit reports it compiles, including failing to implement and maintain reasonable procedures to review data furnished by its vendors, in violation of sections 605(a) and 607(b) of Fair Credit Reporting Act. 

Per the FTC complaint, until at least April 2019, AppFolio provided property management companies with inaccurate information on numerous occasions.  This includes credit reports with incorrect names and dates of birth, missing or inaccurate criminal and eviction records, multiple entries for the same crime or eviction, and obsolete eviction and non-conviction criminal records that exceeded the seven year limit for such information to lawfully be included in a credit report.  The FTC also alleges AppFolio failed to amend its internal procedures to address these issues, despite multiple consumer complaints.  

In addition to the monetary penalty, the proposed settlement requires AppFolio to (i) comply with its obligations under FCRA, (ii) consent to a compliance monitoring program implemented by the FTC, (iii) submit a compliance report to the FTC within one year of the stipulated order, and (iv) submit a compliance notice to the FTC if, at any time over the next ten years, there are any changes to the company that might affect such compliance obligations.  

FTC Press Release | FTC Press Release (II) | Complaint | Stipulated Order